Press Information Bureau

Government of India

Ministry of Finance

09-December-2011 15:46 IST

India successfully hosted the three day 4th International Tax Dialogue Conference on “Tax and Inequality”. The conference was inaugurated by the Finance Minister of India Mr Pranab Mukherjee on 7th December. More than 400 senior tax policymakers and administrators from almost 90 countries participated in this event hosted by the Finance Ministry of India and organized by the International Tax Dialogue (ITD). The ITD is a joint initiative of various organisations working on tax issues – the IMF, the OECD, the World Bank, the European Commission, the IADB, and CIAT.

Speaking at the closing session on the last day of the Conference, here today, Shri. R S Gujral, Finance and Revenue Secretary of India, said that there were two broad themes of the conference, firstly what the reasons for increasing inequality are and secondly how and to what extent this could be reduced through taxation. Various issues related to these two broad themes were discussed. He concluded by saying that it emerged from the conference that there is no tailor made solution and that the solutions need to be adapted to the state of economic development and demographics. Only after taking into account these different factors can the appropriate tax policy response to growing inequalities be addressed, he said.

Mr. Rintaro Tamaki, Deputy Secretary General of the OECD said that this conference has shown that “smart” tax policy can reconcile the need to promote sustainable growth with the need to reduce excessive inequalities, particularly at the top end of the income scale.

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Tax policy must be tailored to reduce inequality while preserving sustainable growth through smart, context-specific measures. Tax policy responses to income disparity were central: participants examined drivers of rising inequality and assessed how taxation can reduce it. The conference concluded that there is no one size fits all remedy; tax instruments must be tailored to a country's economic development and demographic profile. Emphasis was placed on designing smart tax policy that balances redistribution with sustainable growth and on ensuring administrative capacity to implement context specific measures.